Saturday, January 31, 2015

Non Residential Indians (NRI) Accounts

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Non-Resident Ordinary (NRO)
You are a citizen of India. You work here, and you have a good income. Now suppose, you want to move to a foreign country (for whatever purpose) (meaning you are going to be an NRI). Then what will you do to for your Indian earnings, like rent, dividends? Or may be you want to send remittances from foreign country. Then the handy account for you is Non-Resident Ordinary (NRO) Rupee Account.

The balance maintained in this type will be Rupee (INR) dominated. You can open Savings, Current, Fixed, Term - types of account. 


Non-Resident External (NRE)
You are already an NRI. You have foreign currency with you. You can open this type of NRE Account. Note that you have to deposit foreign currency while opening this account (can use traveler's cheque or notes).

The balance will be maintained in Rupee (INR). This will facilitate mostly in your remittances to India. You have several options or opening Savings, Current, Fixed, Term accounts.


Foreign Currency Non-Resident Bank (FCNR(B))
This is another type of account for NRIs and almost similar to NRE account. However there are some major differences -
  • You can only maintain your FCNR(B) account in foreign currencies (like, Pound, Dollars, Euro, Yen, etc)
  • Only one type of deposit is allowed - term deposit of 1 to 5 year maturity.


Now, try to compare these three types of accounts -


Non-Resident (Ordinary) Rupee Account (NRO)
Non-Resident (External) Rupee Account (NRE)
Foreign Currency Non-Resident (Bank) Account (FCNR(B))
Currency
Rupee Denominated (INR)
Rupee Denominated (INR)
USD, Pounds, Euro, Yen, etc.
Who can open?
NRI, Resident before becoming an NRI
NRI
NRI
A/c type
CASA, Fixed/Term
CASA, Fixed/Term
Only Fixed/Term
Purpose
To park Indian earnings, like rent, Indian salary, dividend, etc.
To park overseas savings remitted to India by converting to INR
To maintain account in foreign currency. Only term deposit of 1 to 5 years
Repatriation
Only interest on NRO account balance (after deducting TDS)
Yes
Yes
Tax
Taxed as per applicable slab rate
Tax free
Tax free



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